RAINY DAY FUND:Solar Storage: What Commercial Buyers Need to Know Now

The solar energy industry isn’t the struggling newcomer it used to be.

As the solar industry grows and serves more and more electricity consumers, its impact on and integration into existing grids and systems renders it a key part of our electricity-generation-and-distribution system.

The pace of solar growth accelerates—and it’s clearer than ever the time for solar is now. As a “conventional” and widespread power source today, solar energy is now a standardized utility—rather than just an “alternative” generating source that supplements user needs and feeds the grid. This is partly due to the state of solar-energy storage technologies. Storage feasibility questions—once the happy province of solar skeptics—are quickly becoming a thing of history.

The solar-plus-storage model emerges today as a highly feasible (and economically logical) standard electricity solution for commercial and industrial customers. This is true for residential solar installations as well. This is a surprise to some, but it’s here today, and there’s no denying it. The opportunity to evaluate solar storage’s impact on an enterprise’s solar-energy program is at hand.

Solar energy storage capabilities are coming into their own just in time, given the increasingly fragile, vulnerable, and unreliable nature of the U.S. electric grid. In fact, as solar storage capabilities mature and become mainstream, businesses and industries combining solar generation with solar storage are liberating themselves from dependence on conventional electricity delivery systems—and improving economic outcomes. They’re also increasing their opportunities for integration with the grid. Utilities, the fastest-growing sector for battery systems, improve performance, minimize risks, and manage peak loads.

With the growth in energy-storage facility installations, attachment to the grid is now optional.

The grid is increasingly capable of managing intermittent renewable energy inflow from solar and wind facilities. Increasingly effective and sophisticated energy storage technology greatly facilitates the integration of renewable solar energy into traditional delivery systems (the grid), and this is now becoming a common and well-established part of our nationwide electric equation. Reliable electric-energy storage systems are highly complementary to renewable energy.

Energy storage technologies today are demonstrably safe, reliable and cost effective. The advantages are clear to public utilities, and to private generation sources. Storage capabilities now ensure a growing trend in electric systems development, permitting independent generation, storage, and use of electricity, combined with grid integration.

So, What’s Happened? — What’s New in Energy Storage?

The latest advancements in commercial solar battery storage capabilities and technologies are sufficient now to warrant this broad and accelerating adoption trend, and storage technology will only improve and become less costly as the trend advances. The solar-energy storage systems now being implemented by industrial and commercial enterprises—and rapid expansion over just the last few years—are only the beginning of a long trend in self-sustaining, grid-supplementing systems.

Historically, energy storage has taken the form of pumped hydropower (where water is pumped and stored in hydro-generating facilities for load balancing). This energy storage methodology remains dominant today (representing 95% of all stored energy capacity). But, many energy storage technologies exist, and new commercial energy-storage solutions are implemented on an increasingly broad basis—especially as solar installations explode across the country. Pairing solar installations with energy storage systems will soon become a standard—especially as the size and cost of storage systems are reduced.

Of the new energy-storage solutions, lithium-ion batteries hold and should retain a majority market position due to their low cost and demand-driven production trends. The cost of battery technology is expected to continue falling, from $300/kWh now ($1,000 in 2010) to $120/kWh at the end of 2017 (according to Bloomberg New Energy Finance). These battery systems are coupled with software necessary to manage them, and in large-scale commercial settings typically require a refrigerator-sized space (or multiples of that) depending on the user’s power needs. The systems are charged directly by solar panels, the power is stored and then discharged as needed.

Navigant Research, an energy industry consulting service, reports that 520 MW of new energy storage capacity was deployed globally in 2014 and 2015 (80% of this in the utility sector). By the end of 2015, non-hydro energy storage (i.e., battery) had risen to 2,276 MW worldwide. Navigant also forecasts over 29.4 GW of new energy-storage capacity will be deployed worldwide through 2020 (for a 60% CAGR), and the utility sector will deploy 9,000 MW of new storage capacity by 2020. Navigant also expects global installed energy storage for grid and ancillary services to grow from 1.1 GW in 2016 to 21.6 GW in 2025.

Energy storage capacity in the U.S. grew 284 percent in 2016, and is expected to continue this exponential growth in 2017. The commercial and industrial sector accounted for 21 percent of this energy storage implementation in 2016, and should be at 37 percent by 2020. While a small segment of the energy storage market today, residential energy storage (RES) is important for its surprising growth potential—at approximately 95 MW in 2016 and expected to grow to 3,773 MW in 2025.

The growth trend in energy storage systems is dramatic, and reveals the value, utility, and economic logic of today’s energy storage technology. What remains unclear is how the broad adoption of energy storage systems will impact energy delivery systems generally.

One thing is clear: the advent of affordable, reliable energy storage will shape historic changes in energy system; and energy-storage technology solutions will evolve to meet consumer and market needs.

While utilities will remain the largest share of non-hydro energy-storage-system implementation, C&I energy storage and microgrid solutions are the areas of most untapped potential. For many commercial and industrial enterprises, going solar is now smarter than ever due to technology advances in energy storage and declining battery prices (a trend expected to continue long term).

Distinct advantages for those opting to integrate storage into their solar energy program (co-locating solar and storage solutions) include:

Moreover, because microgrids (a local energy grid with control capability, which means it can disconnect from the traditional grid and operate autonomously) are now widely and demonstrably technologically feasible, they present opportunity for energy-storage developers.

Battery storage of solar energy has the primary advantage of delivering stored power on demand. This permits users to reduce or “shave” their electric demand during peak periods, thereby improving their load profile and reducing demand/spike charges. In areas where demand charges are high, reducing peak demand can be maximized by coupling energy storage systems with solar generating panels. The cost savings can be substantial. The fact is that in many cases, commercial solar energy battery storage is a serious cost-saving solution.

The Value Proposition?

Where does energy storage fit in the electricity market? As renewable energy systems continue to penetrate electricity markets, the energy-storage value proposition—its utility, and economic value—will rise and be recognized. Historically, due to technological limitations, and the industry’s focus on the generation and demand equation, electric energy storage’s value and contribution to the grid has been overshadowed, and underappreciated.

While electric energy storage is still in its early stages with difficult-to-predict outcomes (regulation, technology, and revenue streams), it now has impossible-to-ignore momentum. The energy-storage market is expected to grow dramatically. As this occurs, the very nature of the U.S. electric grid(s) will change. Transmission system operators are likely to increasingly allow C&I customers to provide ancillary services, thus opening a viable revenue stream for unused energy storage that can be released to the grid. This increases the grid’s flexibility and responsiveness, while reducing utility infrastructure costs, and thus, overall electricity delivery costs.

Because of these storage advantages, public incentives for adoption/implementation (e.g., California’s SGIP and tax credits) will grow or be made more compelling. Fortunately, the value of storage is becoming much clearer as implementation grows.

The large utility-scale Swinerton CA solar project started in late 2016 in which utility-scale solar EPC Swinerton Renewable Energy of San Diego assisted on an 80-MWh storage project for Southern California Edison—currently the world’s largest lithium-ion battery storage project. This is an example of a major investment in solar going conventional. Major solar firms are preparing to compete for these projects and play a role in meeting demand for more electricity and more flexible and reliable electric sourcing and delivery mechanisms.

Feasibility / Requirements for Storing On-Site-Generated Solar Energy

Storage may not be the right solution for everyone just yet. But, it is a very real and present opportunity for many commercial and industrial electricity consumers, especially those who’ve already jumped into generating their own solar power. The feasibility of combining solar power and storage system implementation requires an in-depth analysis of the commercial user’s load profile, power consumption trends, and demand spikes, plus the offset potential of a combined solar/storage system. Full consideration of all available rebates, credits and other incentives should be a part of the feasibility analysis. In many cases the analysis will reveal strong economic and reliability advantages.

Commercial on-site solar battery storage systems can be a solution immediately. These systems can be affordably purchased outright or leased directly from solar system providers. Leasing is an attractive option for many organizations seeking to avoid capital costs and ongoing systems operation and maintenance. Energy system investments are attractive because the typical payback term is only three to five years. This takes into account state rebates, federal tax credits, and utility savings.

Boviet Solar USA Does C&I Solar Energy Storage Solutions

To serve and accommodate large-scale electricity demand, Boviet partners with large electricity consumers for preparedness in electricity generation, storage, and delivery. Creating, storing, and consuming electricity under one roof—and integrating effectively with the grid—creates efficiencies previously unattainable, reduces grid reliance/dependence, lowers risk, and increases predictability. It is also a path to new revenue streams and environmental stewardship. All essential for successful enterprise of any size.

We encourage C&I electric consumers to seek expertise in adapting solar storage systems for existing or planned projects, and suggest that solar and storage system planning include a long view of value and returns. To seize the advantages of solar + storage, work with solar installation and energy-storage providers that collaborate on a holistic level to ensure the right implementation options (including the best product offerings for the project) are explored and made available.

Solar storage is yet another life-changing, economy-improving part of the renewable energy story that we look forward to building on.

About the Publisher

Boviet Solar USA is a part of a $1.5 billion holding company. Want to be a part of our 30-year narrative? Click here to download more information or get in touch with our consulting team to answer your specific questions.